Comprehensive SIE Practice Exam Questions with Verified Solutions

1 Comprehensive SIE Practice Exam Questions with Verified Solutions What role does the syndicate desk play during an equity offering? ✔✔ It is responsible for creating an order book and managing the allocation of shares. What advantage does investing in index funds offer? ✔✔ Index funds typically incur lower management fees because they follow a passive management approach. How does a primary distribution differ from a secondary distribution? ✔✔ A primary distribution inv olves the issuer selling new shares, whereas a secondary distribution involves selling previously issued shares. On what basis are dollar prices and accrued interest on municipal bonds usually calculated? ✔✔ Using a 30/360 day count convention. What bene fit do Direct Participation Programs (DPPs) provide to investors? ✔✔ They offer access to investments that are not correlated with traditional market assets. 2 When is call protection most beneficial for a bondholder? ✔✔ It is most advantageous when bond pr ices are increasing. What change occurs to the stock price as a result of a stock split? ✔✔ The price per share decreases. When is a debt portfolio most stable? ✔✔ When it consists of debt securities with shorter maturity dates. What is a requirement fo r a broker -dealer’s anti -money laundering (AML) strategy? ✔✔ Appointing an AML compliance officer. What action violates FINRA regulations regarding selling away? ✔✔ Engaging in private securities transactions without the broker -dealer’s written consent. If Company ABC declares a 20% stock dividend and a customer holds 1,000 shares valued at $50 each, what will be the new share quantity and price after the dividend? 3 ✔✔ The customer will have 1,200 shares priced at $41.67 each. What characteristic is share d by both Roth 401(k) and Roth IRA plans? ✔✔ Distributions that meet certain criteria are free from federal income tax. What task is an associated person, who is not a registered representative, permitted to perform? ✔✔ Providing account opening forms to new clients. If XYZ 5.50s 2030 bonds are last traded at 102, what does this indicate about their market value? ✔✔ The bonds are selling at a premium. What is required for a registered representative (RR) to run a mutual fund ad? ✔✔ Approval must be obtai ned in writing from a registered principal within the RR's firm. For how long is a letter of intent valid for mutual fund purchases? ✔✔ It remains valid for up to 13 months. 4 What instrument does a corporation use to offer its shareholders the right to bu y additional shares at a set price? ✔✔ Rights. What does the call provision of a bond specify? ✔✔ It details the dates and prices at which the bond can be redeemed before its maturity. How many quarters of declining GDP are necessary to classify as a rec ession? ✔✔ Two quarters. What is the regular settlement period for Treasury bonds? ✔✔ The next business day. How are assets distributed in a customer account held as tenants in common upon the account holder’s death? ✔✔ According to the decedent's will or applicable state laws. What is meant by treasury stock?